The high-profile insider trading trial of hedge fund manager Raj Rajaratnam enters its closing phase on Wednesday and will turn on whether prosecutors or defense lawyers can summarize their case in a way that most resonates with jurors.
In six weeks of proceedings, the government played dozens of secretly recorded phone conversations and called three of Rajaratnam's former friends to testify that they were part of a conspiracy to profit from corporate secrets.
In reply, lawyers for Rajaratnam, who faces up to 25 years in prison if convicted, inundated the jury with graphs, charts and other documents to underpin their argument that research and public information guided his trades.
That is probably leaving them kind of bewildered, said Eric Fisher, an attorney with law firm Butzel Long and a former federal prosecutor, who is not involved in the case. It's going to be the defense's job to make sense of it in closing.
Prosecutors accuse Rajaratnam of making an illicit $63.8 million between 2003 and March 2009 by trading on tips from a network of highly-placed corporate insiders.
In closing arguments, Assistant U.S. Attorney Reed Brodsky can be expected to underline the correlation between the tips and trades.
The government wants to simplify it, they want to narrow it, they want the jury to focus on what matters, said Professor Bennett Gershman, a former New York state prosecutor who teaches at Pace University law school.
To convict, the government must convince the jury beyond a reasonable doubt that Rajaratnam, 53, received material non-public information from people who had a fiduciary duty not to disclose it, and that he knew it was wrong to trade on it.
The last phone tap heard by the jury was Rajaratnam referring to how important timing was. On the September 30, 2008 call between Rajaratnam and former trader and co-conspirator Danielle Chiesi, the two are heard discussing someone else's purchase that day of chipmaker Advanced Micro Devices Inc stock.
Chiesi says that's a very bold move to make unless you know what we know.
It was a reference to purportedly inside information they had about AMD's imminent sale of a manufacturing business that was publicly announced seven days later.
Look, the other thing is this right, it's been widely speculated. What people don't know is the time, Rajaratnam was heard telling Chiesi.
Sri Lankan-born Rajaratnam, a tech stocks researcher who founded the Galleon Group hedge fund, is charged with 14 counts of conspiracy and securities fraud in what prosecutors have described as the biggest probe of insider trading in decades.
In all, 19 out of 26 people charged in the broad Galleon case have pleaded guilty. Rajaratnam has vowed to clear his name at trial. A second trial with five defendants is scheduled to start in the same New York courthouse on May 16.
The case is USA v Raj Rajaratnam et al, U.S. District Court for the Southern District of New York, No. 09-01184.
(Editing by Steve Orlofsky)